Projects S and L Are Equally Risky, Mutually Exclusive, and Have

question 20

Multiple Choice

Projects S and L are equally risky, mutually exclusive, and have normal cash flows.Project S has an IRR of 15%, while Project L's IRR is 12%.The two projects have the same NPV when the cost of capital is 7%.Which of the following statements is CORRECT?

• A) If the cost of capital is 6%, Project S will have the higher NPV.
• B) If the cost of capital is 13%, Project S will have the lower NPV.
• C) If the cost of capital is 10%, both projects will have a negative NPV.
• D) Project S's NPV is more sensitive to changes in cost of capital than Project L's.
• E) If the cost of capital is 10%, both projects will have positive NPVs.

---

Definitions:

Alkalosis

Condition characterized by blood pH of 7.45 or above.

Hyperkalemia

A condition in which there is an excessively high level of potassium ions in the blood, potentially leading to serious heart rhythm problems.

Hypokalemia

Abnormally small concentration of potassium ions in the blood.

Hyperkalemia

A medical condition characterized by abnormally high levels of potassium in the bloodstream, which can affect heart and neuromuscular function.